Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Marqeta (MQ)
Trailing 12-Month Free Cash Flow Margin: 24.7%
Powering the cards behind innovative fintech services like Block's Cash App, Marqeta (NASDAQ:MQ) provides a cloud-based platform that allows businesses to create customized payment card programs and process card transactions.
Why Does MQ Worry Us?
- Revenue increased by 11% annually over the last five years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 8.9 percentage points over the next year
Marqeta’s stock price of $15.85 implies a valuation ratio of 2.3x forward price-to-sales. To fully understand why you should be careful with MQ, check out our full research report (it’s free).
American Eagle (AEO)
Trailing 12-Month Free Cash Flow Margin: 6%
With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.
Why Does AEO Fall Short?
- Annual revenue growth of 4.3% over the last three years was below our standards for the consumer retail sector
- Conservative approach to adding new stores shows management is focused on improving existing location performance
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
American Eagle is trading at $14.90 per share, or 8.3x forward P/E. Read our free research report to see why you should think twice about including AEO in your portfolio.
One Stock to Watch:
ePlus (PLUS)
Trailing 12-Month Free Cash Flow Margin: 2.2%
Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ:PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.
Why Are We Positive on PLUS?
- Annual revenue growth of 8.5% over the last five years beat the sector average and underscores the unique value of its offerings
- Free cash flow margin expanded by 6.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $92.08 per share, ePlus trades at 16.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.